united states of america federal energy ......(202) 502-8615 [email protected] docket no....

156 FERC ¶ 61,045

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 35

[Docket No. RM16-17-000]

Data Collection for Analytics and Surveillance and Market-Based Rate Purposes

(July 21, 2016)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes to

revise its regulations to collect certain data for analytics and surveillance purposes from

market-based rate (MBR) sellers and entities trading virtual products or holding financial

transmission rights and to change certain aspects of the substance and format of

information submitted for MBR purposes. The revisions proposed herein include new

requirements for those entities to report certain information about their legal and financial

connections to other entities to assist the Commission in its analytics and surveillance

efforts. The Commission previously proposed to require certain market participants in

the Commission-jurisdictional organized wholesale electric markets to file similar

information about their financial and legal connections in the Collection of Connected

Entity Data from Regional Transmission Organizations and Independent System

Operators Notice of Proposed Rulemaking issued in Docket No. RM15-23-000

(Connected Entity NOPR). However, as described herein, this proposal presents

Docket No. RM16-17-000 ii

substantial revisions from what the Commission proposed in the Connected Entity

NOPR, including, among other things: (i) a different set of filers; (ii) a reworked and

substantially narrowed definition of Connected Entity; and (iii) a different submission

process. With respect to the MBR program, the proposals include: (i) adopting certain

changes to reduce and clarify the scope of ownership information that MBR sellers must

provide, similar to the notice of proposed rulemaking issued in Docket No. RM16-3-000

(Ownership NOPR); (ii) reducing the information required in asset appendices; and

(iii) collecting currently- required MBR information and certain new information in a

consolidated and streamlined manner. The Commission proposes all of these changes in

order to eliminate duplication, ease compliance burdens, modernize its data collections,

and render information collected through its programs usable and accessible for the

Commission and its staff. In furtherance of this effort, in orders being issued

concurrently with the instant NOPR, the Commission withdraws the Connected Entity

NOPR issued in Docket No. RM15-23-000 and the Ownership NOPR issued in Docket

No. RM16-3-000.1 The Commission also proposes to eliminate the requirement that

MBR sellers submit corporate organizational charts adopted in Order No. 816 in Docket

No. RM14-14-000.

1 Collection of Connected Entity Data from Regional Transmission Organizations

and Independent System Operators, 156 FERC ¶ 61,046 (2016); Ownership Information

in Market-Based Rate Filings, 156 FERC ¶ 61,047 (2016).

Docket No. RM16-17-000 iii

DATES: Comments are due [INSERT DATE 45 days after publication in the

FEDERAL REGISTER]

ADDRESSES: Comments, identified by docket number, may be filed in the following

ways:

Electronic Filing through http://www.ferc.gov. Documents created electronically

using word processing software should be filed in native applications or print-to-

PDF format and not in a scanned format.

Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver

comments to: Federal Energy Regulatory Commission, Secretary of the

Commission, 888 First Street, NE, Washington, DC 20426.

Instructions: For detailed instructions on submitting comments and additional

information on the rulemaking process, see the Comment Procedures Section of this

document

FOR FURTHER INFORMATION CONTACT:

Jamie Marcos

Office of Enforcement

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-6628

[email protected]

Laura Chipkin

Office of General Counsel




(202) 502-8615

[email protected]

http://www.ferc.gov/

Docket No. RM16-17-000 iv

Melissa Lozano

Office of Energy Market Regulation




(202) 502-6267

[email protected]

Byron Corum

Office of Energy Market Regulation




(202) [email protected]

SUPPLEMENTARY INFORMATION:

mailto:[email protected]



Data Collection for Analytics and

Surveillance and Market-Based Rate

Purposes

Docket No. RM16-17-000

NOTICE OF PROPOSED RULEMAKING

TABLE OF CONTENTS

Page Numbers

I. Background .................................................................................................................. 5

II. Discussion .................................................................................................................... 8

A. Proposals Regarding Connected Entity Information ............................................. 13

B. Proposals Regarding MBR Information ................................................................ 16

1. Ownership Information ..................................................................................... 18

2. Asset Appendix Information ............................................................................. 22

3. Indicative Screen and Other MBR Information ................................................ 30

C. Need and Authority: Analytics and Surveillance .................................................. 31

D. Nature of the Connected Entity Information Submissions .................................... 35

E. Legal Entity Identifiers .......................................................................................... 40

F. Confidentiality and Due Diligence ........................................................................ 40

G. Filing Requirement for Existing and New Virtual/FTR Participants .................... 42

H. Baseline Submission Required of Existing MBR Sellers ..................................... 43

I. Ongoing Connected Entity Information Submission Requirements ..................... 44

J. Ongoing MBR Seller Filing Requirements ........................................................... 45

III. Information Collection Statement ......................................................................... 49

IV. Environmental Analysis ........................................................................................ 55

V. Regulatory Flexibility Act ......................................................................................... 56

VI. Comment Procedures ............................................................................................. 58

VII. Document Availability .......................................................................................... 59

156 FERC ¶ 61,045



Data Collection for Analytics and Docket No. RM16-17-000

Surveillance and Market-Based Rate

Purposes

NOTICE OF PROPOSED RULEMAKING

(July 21, 2016)

1. The Federal Energy Regulatory Commission (Commission) proposes in this

Notice of Proposed Rulemaking (NOPR) to amend its regulations to add Subpart K to

Title 18 of the Code of Federal Regulation (CFR), which would include data collection

requirements for market-based rate (MBR) sellers2 and certain other participants in the

organized wholesale electric markets subject to the Commission’s jurisdiction pursuant to

the Federal Power Act (FPA), and revise Part 35, Subpart H, which governs MBR

authorization for wholesale sales of electric energy, capacity, and ancillary services by

public utilities.3 Specifically, the Commission is proposing to revise its regulations to

2 All references in this NOPR to “MBR seller” (or “MBR sellers”) refer to both

entities seeking to obtain MBR authority by filing applications with the Commission and

to MBR sellers seeking to retain market-based rate authority and is intended to have the

same meaning as the defined term “Seller” in 18 CFR 35.36(a)(1).

3 The organized wholesale electric markets subject to the Commission’s

jurisdiction refers to the markets operated by Regional Transmission Organizations

(RTOs) and Independent System Operators (ISO) operating in the United States. These

RTOs and ISOs include: PJM Interconnection, L.L.C. (PJM), New York Independent

(continued ...)

Docket No. RM16-17-000 2

add new data submission requirements for MBR sellers and entities, other than FPA

section 201(f) entities,4 that trade virtual products5 or hold financial transmission rights

(FTR) 6 in the organized wholesale electric markets subject to the Commission’s

System Operator, Inc. (NYISO), ISO New England Inc. (ISO-NE), California

Independent System Operator Corporation (CAISO), Midcontinent Independent System

Operator, Inc. (MISO), and Southwest Power Pool, Inc. (SPP).

4 See 18 U.S.C. 824(f) (2012).

5 “Virtual trading involves sales or purchases in an RTO/ISO day-ahead market

that do not go to physical delivery. For example, virtual bidding allows entities that do

not serve load to make purchases in the day-ahead market. Such purchases are

subsequently sold in the real-time spot market. Likewise, entities without physical

generating assets can make power sales in the day-ahead market that are subsequently

purchased in the real-time market. By making virtual energy sales or purchases in the

day-ahead market and settling these positions in the real-time, any market participant can

arbitrage price differences between the two markets.” Market-Based Rates for Wholesale

Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities, Order

No. 697, FERC Stats. & Regs. ¶ 31,252 at n.1047, clarified, 121 FERC ¶ 61,260, at P 921

n.1047 (2007), order on reh’g, Order No. 697-A, FERC Stats. & Regs. ¶ 31,268,

clarified, 124 FERC ¶ 61,055, order on reh’g, Order No. 697-B, FERC Stats. & Regs.

¶ 31,285 (2008), order on reh’g, Order No. 697-C, FERC Stats. & Regs. ¶ 31,291 (2009),

order on reh’g, Order No. 697-D, FERC Stats. & Regs. ¶ 31,305 (2010), aff’d sub nom.

Mont. Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir. 2011), cert. denied, 133 S. Ct.

26 (2012). Organized wholesale electric markets offer various virtual products, including

Up-To Congestion products, for which no generation is dispatched and no load is served,

and obligations are met through cash settlement. Coaltrain Energy, L.P., et al.,

155 FERC ¶ 61,204 at P 15 (2016). “While virtual products carry no obligation to buy or

sell physical power, they serve a direct role in day-ahead price formation as reflected in

day-ahead [Locational Marginal Prices (LMP)]. As such, virtual products can: (i) be the

price setting marginal factor in determining day-ahead LMPs; (ii) affect day-ahead

dispatch; and (iii) affect other market participant positions.” Id.

6 The term “FTR” as used in this NOPR is intended to cover not only Financial

Transmission Rights, a term used by PJM, ISO-NE, and MISO, but also Transmission

Congestion Contracts in NYISO, Transmission Congestion Rights in SPP, and

(continued ...)


jurisdiction (Virtual/FTR Participants). The Commission is also proposing to require

Virtual/FTR Participants to submit certain information to the Commission within 30 days

of commencing trading of virtual or FTR products.

2. The purpose of this new data collection is to assist the Commission in

understanding the financial and legal connections among market participants and other

entities and their activities in Commission-jurisdictional electric markets. In this NOPR,

the Commission also proposes to modify its regulations to change certain aspects of the

substance and format of information submitted for MBR purposes. Specifically, we

propose to collect currently-filed MBR information and the new information proposed to

be collected in this NOPR in a consolidated and streamlined manner through a relational

database,7 which will eliminate duplication and render information collected for its MBR

and analytics and surveillance purposes more usable and accessible to the Commission

and its staff.

3. As reflected in this NOPR, the Commission has reworked and substantially

narrowed the definitions proposed in the Collection of Connected Entity Data from

Congestion Revenue Rights in CAISO.

7 A relational database, or RDB, is a database model whereby multiple data tables

relate to one another via unique identifiers. A relational database contains a table for

each subject (e.g., generation assets) with every row in the table representing information

regarding a single variable of that subject (e.g., a particular generation unit) and each

column containing a particular quality of that variable (e.g., a generation unit’s capacity

rating). Relational databases are structured to allow for easy data retrieval while avoiding

inconsistencies and redundancies.


Regional Transmission Organizations and Independent System Operators NOPR in

Docket No. RM15-23-000 (Connected Entity NOPR),8 conforming them where possible

to existing MBR affiliate definitions, and has entirely eliminated large portions of the

data proposed for collection in that NOPR. In orders being issued concurrently with the

instant NOPR, the Commission withdraws the Connected Entity NOPR9 and the

Ownership Information in Market-Based Rate Filings NOPR in Docket No. RM16-3-000

(Ownership NOPR)10 and terminates those dockets.11 The Commission also proposes to

remove the existing requirement that MBR sellers submit corporate organizational charts

adopted in Order No. 816 in Docket No. RM14-14-000.12

8 Collection of Connected Entity Data from Regional Transmission Organizations

and Independent System Operators, FERC Stats. & Regs. ¶ 32,711 (2015) (Connected

Entity NOPR).

9 Connected Entity NOPR, FERC Stats. & Regs. ¶ 32,711.

10 Ownership Information in Market-Based Rate Filings, FERC Stats & Regs.

¶ 32,713 (2015) (Ownership NOPR).

11 Collection of Connected Entity Data from Regional Transmission

Organizations and Independent System Operators, 156 FERC ¶ 61,046 (2016);

Ownership Information in Market-Based Rate Filings, 156 FERC ¶ 61,047 (2016).

12 The organizational chart requirement was first suspended in the order that

partially extended the compliance effective date of Order No. 816. See Refinements to

Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy,

Capacity and Ancillary Services by Public Utilities, Order No. 816, 80 Fed. Reg. 67,056

(Oct. 30, 2015), FERC Stats. & Regs. ¶ 31,374 (2015), order on reh’g, Order No. 816-A,

81 Fed. Reg. 33,375 (May 26, 2016), FERC Stats. & Regs. ¶ 31,382 (2016). The

organizational chart requirement was again suspended in Order No. 816-A “until the

Commission issues an order at a later date addressing this requirement.” Order

No. 816-A, FERC Stats. & Regs. ¶ 31,382 at P 47.


I. Background

4. Recently, the Commission sought to improve its analytics and surveillance of the

electric markets by issuing the Connected Entity NOPR, which proposed collecting

information from participants in Commission-jurisdictional organized wholesale electric

markets concerning their ownership, employee, debt, and contractual connections. This

information was to be submitted to the RTOs and ISOs, which in turn would provide the

necessary information to the Commission. In some cases, the information sought under

the Connected Entity NOPR was similar to, but somewhat different from, the information

to be provided by MBR sellers.

5. The desirability of consolidating MBR and Connected Entity data under one

reporting regime was advocated to the Commission by members of the industry in

comments responding to the Connected Entity NOPR. In the Connected Entity NOPR,

the Commission proposed that each RTO and ISO be required to electronically deliver to

the Commission, on an ongoing basis, data from its market participants13 that would:

(i) identify the market participants by means of a common alpha-numerical identifier,

specifically, a Legal Entity Identifier (LEI); 14 (ii) list their “Connected Entities,” which

would include entities that have certain ownership, employment, debt, or contractual

13 The Connected Entity NOPR proposed to require all RTO/ISO market

participants, including MBR sellers and entities that solely participate in the RTO/ISO

virtual and/or FTR markets, to report Connected Entity information.

14 An LEI is a unique 20-digit alpha-numeric code assigned to a single entity.

They are issued by the Local Operating Units of the Global LEI System.


relationships with market participants; and (iii) describe in brief the nature of the

relationship of each Connected Entity. The Commission observed that there is a risk that

a market participant may take actions to benefit another entity that bears a financial or

legal relationship to it, and that entities under common control may collude to manipulate

the market. Given the potential for such conduct, the Commission found it needed to

understand the relationships and corresponding incentives between entities to help

determine whether they might be engaging in acts of market manipulation. The

Commission also described the deficiencies in scope, format, and timing of the existing

data sources for the requisite information.15

6. Many commenters objected to the proposed data submissions on the grounds that

the information would be largely duplicative of other Commission reporting

requirements, especially that of its MBR program. Several commenters objected to the

Connected Entity NOPR on the grounds that the information to be submitted was based

on a Connected Entity definition that was similar to, yet different from, the affiliate

definition currently used in the MBR program. A common theme in the comments was

the desirability of reconciling reporting requirements to accommodate the needs of both

the MBR and analytics and surveillance programs, thus eliminating the necessity of

maintaining disparate, but partially overlapping, reporting regimes.

15 See Connected Entity NOPR, FERC Stats. & Regs. ¶ 32,711 at PP 6-14.


7. In the Connected Entity NOPR, the Commission also proposed that the Connected

Entity information be submitted to the RTOs and ISOs, who would then pass it on to the

Commission. A number of commenters objected to this mechanism as unwieldy and

unnecessarily burdensome.

8. Over the last two years, the Commission has also sought to modify, clarify, and

streamline the Commission’s MBR requirements to, among other things, ease burdens on

industry and the Commission. This initiative involved eliminating or refining some

existing MBR requirements. The resulting reforms were set forth in Order Nos. 816 and

816-A,16 and in the Ownership NOPR. In the Ownership NOPR, the Commission

proposed to reduce and clarify the scope of ownership information that MBR sellers must

provide, specifically to eliminate reporting of comprehensive ownership information

required under Order No. 697-A that is not necessary for the Commission’s assessment of

horizontal or vertical market power. Specifically, the Commission proposed that an

MBR seller be required to identify and describe only two categories of “affiliate owners”

(i.e., certain owners that meet the definition of “affiliate” in 18 CFR 35.36(a)(9)).17 These

16 Order No. 816, FERC Stats. & Regs. ¶ 31,374, order on reh’g, Order No. 816-

A, FERC Stats. & Regs. ¶ 31,382.

17 As specified in the Commission’s regulations, “affiliate” of a specified company

means: (i) Any person that directly or indirectly owns, controls, or holds with power to

vote 10 percent of more of the outstanding voting securities of the specified company;

(ii) Any company 10 percent or more of whose outstanding voting securities are owned,

controlled, or held with power to vote, directly or indirectly, by the specified company;

(iii) Any person or class or persons that the Commission determines, after appropriate

notice and opportunity for hearing, to stand in such relation to the specified company that

(continued ...)


two categories are: (1) “ultimate affiliate owner(s),” defined as the furthest upstream

affiliate owner(s) in the ownership chain; and (2) affiliate owners that have a franchised

service area or MBR authority, or that directly own or control generation; transmission;

intrastate natural gas transportation, storage or distribution facilities; or physical coal

supply sources or ownership of or control over who may access transportation of coal

supplies.18

9. The information proposed to be collected under the two separate NOPRs was

different in scope. Commenters to the Connected Entity NOPR suggested that this

incongruity be removed and that the information proposed in the Ownership NOPR and

Connected Entity NOPR be collected contemporaneously to eliminate the burden of

submitting duplicative information to the Commission.

II. Discussion

10. The Commission appreciates these comments and agrees that compliance burdens

should be minimized where possible. In response, the Commission considered whether

the various reporting requirements needed for MBR and analytics and surveillance

there is liable to be an absence of arm’s-length bargaining in transactions between them

as to make it necessary or appropriate in the public interest or for the protection of

investors or consumers that the person be treated as an affiliate; and (iv) Any person that

is under common control with the specified company. For purposes of the affiliate

definition in section 35.36(a)(9), owning, controlling or holding with the power to vote,

less than 10 percent of the outstanding voting securities of a specified company creates a

rebuttable presumption of lack of control. 18 CFR 35.36(a)(9)(v) (2015).

18 Ownership NOPR, FERC Stats. & Regs. ¶ 32,713 at P 9.


purposes could be combined in such a way as to eliminate duplication and unnecessary

differences, with the aim of providing the Commission with the information it needs in

the least burdensome manner possible.

11. The result of these efforts is embodied in the instant NOPR. In this NOPR, we

propose to collect certain data for analytics and surveillance purposes and to change

certain aspects of the substance and format of information submitted for MBR purposes.

Specifically, this NOPR sets out two categories of information submission requirements:

requirements applicable only to MBR sellers (MBR Information); and requirements

applicable to MBR sellers and Virtual/FTR Participants (Connected Entity Information).

Connected Entity Information would be submitted both by MBR sellers (although not

pursuant to the MBR program), and Virtual/FTR Participants. MBR Information would

be submitted only by MBR sellers. As discussed below, we propose certain changes to

the types of information currently required for MBR purposes and to the electronic

format in which certain data will be submitted.

12. In this NOPR, we first describe the revised proposals regarding Connected Entity

Information and proposals regarding MBR Information. Next, we discuss the need and

authority for the collection of the Connected Entity Information as well as the nature of

that information. We then discuss the proposed use of LEIs and discuss confidentiality

and due diligence relating to the submission of Connected Entity Information. We next

propose certain submission requirements for existing and new Virtual/FTR Participants

and a baseline submission required of existing MBR sellers. Lastly, we propose ongoing


Connected Entity Information submission requirements and ongoing MBR seller filing

requirements.

13. Like the Connected Entity NOPR, this NOPR does not impose any filing

requirements on entities that only sell natural gas.19 Also, like the Connected Entity

NOPR, this NOPR proposes that entities that submit the required data to the Commission

obtain and submit an LEI; however, it does not propose requiring reported Connected

Entities or affiliate owners to obtain LEIs. Additionally, this NOPR proposes that all

Connected Entity Information and most of the MBR Information be consolidated and

submitted electronically into a relational database.

14. Specifically, we propose to consolidate the Commission’s collection of certain

information for MBR and analytics and surveillance purposes in a relational database.

We propose that the relational database information be submitted using an extensible

markup language (XML) schema,20 which will permit filers to assemble an XML filing

19 Entities that only sell natural gas may, however, be reported by an MBR seller

or Virtual/FTR Participant if they qualify as Connected Entities under the proposed

definition of Connected Entity.

20 As the Commission previously explained, XML schemas facilitate the sharing

of data across different information systems, particularly via the Internet, by structuring

the data using tags to identify particular data elements. For example, each filed tariff

change will include tags for the relevant information. The tagged information can be

extracted and separately searched. See Electronic Tariff Filings, Order No. 714, FERC

Stats. & Regs. ¶ 31,276, at P 12 & n.8 (2008). The Commission currently collects other

data, including Electric Quarterly Reports (EQR) and eTariffs using XML. See Order

No. 714, FERC Stats. & Regs. ¶ 31,276 (using XML for eTariff filings); see also Revised

Public Utility Filing Requirements, Order No. 2001, FERC Stats. & Regs. ¶ 31,127,

reh’g denied, Order No. 2001-A, 100 FERC ¶ 61,074, reh’g denied, Order No. 2001-B,

(continued ...)


package that includes all of the necessary attachments, including the cover letter and any

related MBR tariffs. Upon the receipt of the filing, the XML schema will enable the

Commission to parse21 the filed package into its component parts, place the filed

documents into its eLibrary system where appropriate and provide the metadata22 that

will permit automated organization of the filing and permit the Commission to search the

relational database. The mechanics of and formatting for data submission by filers would

be provided on the Commission’s website.

15. A data dictionary posted on the Commission’s website would define the

framework, i.e., terms and values, to be followed by users in submitting MBR and

Connected Entity Information for inclusion in the relational database. The Commission

would also post to its website any minor and non-material changes to the data dictionary

100 FERC ¶ 61,342, order directing filing, Order No. 2001-C, 101 FERC ¶ 61,314

(2002), order directing filings, Order No. 2001-D, 102 FERC ¶ 61,334 (2003), order

refining filing requirements, Order No. 2001-E, 105 FERC ¶ 61,352 (2003), clarification

order, Order No. 2001-F, 106 FERC ¶ 61,060 (2004), order revising filing requirements,

Order No. 2001-G, 120 FERC ¶ 61,270, order on reh’g and clarification, Order

No. 2001-H, 121 FERC ¶ 61,289 (2007), Order revising filing requirements, Order

No. 2001-I, FERC Stats. & Regs. ¶ 31,282 (2008) (using XML for EQRs).

21 Parse means to capture the hierarchy of the text in the XML file and transform it

into a form suitable for further processing. Order No. 714, FERC Stats. & Regs. ¶ 31,276

at n.9.

22 Metadata is data or information beyond or about other data. For example, in the

XML schema for eTariff, one required element is a proposed effective date and another

element is the text of the tariff provision. The proposed effective date is considered to be

metadata relative to the tariff text. See Order No. 714, FERC Stats. & Regs. ¶ 31,276

at P 12 & n.10.


as necessary and alert relational database users via email of any changes. 23 The current

draft of this data dictionary is attached in Attachment D. We seek comment on the

specific content for the relational database as set forth in the current draft of the data

dictionary that is attached. In addition, Commission staff has been and will continue to

conduct substantial outreach with the industry, including meetings and technical

workshops on the data dictionary and the submittal process. A notice for the first

workshop, which will focus on the draft data dictionary included as Attachment D, is

being issued contemporaneously with this NOPR.24

16. We anticipate that the data dictionary, the XML schema definition with

appropriate validations, and a temporary test environment will be posted on the

Commission website upon issuance of a final rule in this proceeding. In addition, we

would also provide an email portal and other points of contact on the Commission

23 The Commission proposes to utilize the same procedures set forth in

the recently issued order addressing, among other things, revisions to the EQR Data

Dictionary. See Filing Requirements for Electric Utility Service Agreements, 155 FERC ¶ 61,280, at P 3 (2016) (“Going forward, consistent with section 35.10b of the

Commission’s regulations, future minor or non-material changes to the reporting

requirements and EQR Data Dictionary will be posted directly to the Commission’s

website, and EQR users will be alerted via email. This process will enable the

Commission to make necessary minor or non-material changes in a more timely manner.

Conversely, significant changes to the EQR reporting requirements and the EQR Data

Dictionary will be proposed in a Commission order or rulemaking, which would provide

an opportunity for comment.”).

24 Notice of Technical Workshop on the Draft Data Dictionary Attached to the

Data Collection for Analytics and Surveillance and Market-Based Rate Purposes Notice

of Proposed Rulemaking, 156 FERC ¶ 61,045 (2016).


website for filers to seek guidance from Commission staff on the final rule and technical

aspects of making the required submissions.

A. Proposals Regarding Connected Entity Information

17. The Commission received many comments objecting to the scope of the

Connected Entity NOPR. The Commission carefully considered those comments and

substantially clarified and narrowed the definitions proposed in this NOPR from those

proposed in the Connected Entity NOPR. In addition, the definitions proposed in this

NOPR reflect, where possible, the affiliate definitions found in the MBR regulations. To

better align the Connected Entity Information requirements with the MBR Information

requirements, we propose that the definition of Connected Entity ownership information

be limited to “affiliates,” as defined for purposes of MBR requirements in

section 35.36(a)(9) of the Commission’s regulations, that are either: (i) an “ultimate

affiliate owner” of the entity, as defined for purposes of MBR requirements in

section 35.37(a)(2); (ii) an entity that participates in Commission-jurisdictional

organized wholesale electric markets; or (iii) an entity that purchases or sells financial

natural gas or electric energy derivative products that settle off of the price of physical

electric or natural gas energy products. We also propose to replace the category of

“employees” proposed in the Connected Entity NOPR with a much narrower category of

“Trader,” which we propose to define as “a person who makes, or participates in,

decisions and/or devises strategies for buying and selling physical or financial electric or

natural gas energy products.” In addition, we propose to eliminate entirely the reporting

of debt instruments. We also propose to narrow and rework the category of contractual


Connected Entities reported from that originally proposed in the Connected Entity

NOPR. As narrowed, the category will refer only to entities that have entered into an

agreement with a submitting entity that “confers control over an electric generation asset

that is used in, or offered into, wholesale electric markets.”

18. We also propose a reporting process that would permit, where possible, unified

submissions of both MBR and Connected Entity Information. Additionally, we propose

that, as discussed below, all the required data be submitted directly to the Commission

rather than to the RTOs and ISOs. This will obviate the need for RTOs and ISOs to act

as middlemen in the collection process, as proposed in the Connected Entity NOPR, and

eliminate the need for multiple RTO/ISO filings for entities that participate in more than

one Commission-jurisdictional organized wholesale electric market.

19. Because there are separate legal justifications and regulations for the various data

submissions proposed in this NOPR, it is useful to think of the requirements in two parts:

those pertaining to the MBR program, and those pertaining to analytics and surveillance.

As discussed below, we propose that all MBR sellers largely continue to submit data

under the existing MBR regulations, with certain modifications proposed in this NOPR.25

We further propose that MBR sellers be required to submit data under the Connected

Entity regulations proposed in this NOPR. We propose that Virtual/FTR Participants that

25 For a short-hand comparison of the Ownership NOPR and the Existing MBR

Requirements with the current NOPR proposal, see Attachment A: Comparison of

Ownership NOPR and Existing MBR Requirements with the Current NOPR Proposal.


do not require MBR authority would submit data only under the Connected Entity

regulations proposed in this NOPR. We propose to require that the XML filing indicate

whether a particular piece of information is submitted for MBR purposes. Undesignated

information would, therefore, be considered as provided pursuant to the Connected Entity

requirements. These indications are necessary to allow an entity seeking to obtain or

retain MBR authority to identify the specific information necessary to support its

requested authorization consistent with our regulations. Entities that trade solely virtual

instruments and/or FTRs are not required to obtain MBR authority, and therefore would

not be required to submit MBR Information. Therefore, the only information such

entities would need to submit to the Commission would be that needed for analytics and

surveillance purposes.

20. The Commission believes that entities submitting only Connected Entity data

should be subject to the same candor requirements of section 35.41(b) of the

Commission’s regulations as are MBR sellers. This regulation requires MBR “sellers,”

as defined in section 35.36(a)(1) of the Commission’s regulations, to submit accurate,

factual, and complete information in any communication with the Commission,

Commission-approved market monitors, RTOs, and ISOs. Therefore, we propose to add

a new section 35.50(d) that would require the same candor from Virtual/FTR Participants


in any of their communications with the Commission, Commission-approved market

monitors, RTOs, and ISOs, and jurisdictional transmission providers.26

B. Proposals Regarding MBR Information

21. The Commission uses a two-part approach when assessing whether a seller should

be granted MBR authority: (1) whether the seller and its affiliates lack, or have

adequately mitigated, market power in generation (i.e., horizontal market power); and

(2) whether the seller and its affiliates lack, or have adequately mitigated, market power

in transmission and whether the seller or its affiliates can erect other barriers to entry

(i.e., vertical market power).27 In Order No. 697, the Commission adopted two indicative

screens for assessing horizontal market power: the pivotal supplier screen and the

wholesale market share screen.28 The pivotal supplier screen evaluates the MBR seller’s

potential to exercise market power based on the seller’s uncommitted capacity at the time

of annual peak demand in the relevant market. The wholesale market share screen

measures whether a seller has a dominant position in the market by analyzing the number

26 In the Connected Entity NOPR, the Commission proposed to require market

participants to certify, on a yearly basis, that their Connected Entity data is

comprehensive and accurate. Connected Entity NOPR, FERC Stats. & Regs. ¶ 32,711

at P 30. This NOPR does not propose to include that requirement.

27 See Order No. 816, FERC Stats. & Regs. ¶ 31,374 at P 4; Order No. 697, FERC

Stats. & Regs. ¶ 31,252 at P 399.

28 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at PP 62-63.


of megawatts (MW) of uncommitted capacity it owns or controls, relative to the

uncommitted capacity of the relevant market.

22. With respect to the vertical market power analysis, in cases where a public utility

or its affiliates owns, operates, or controls transmission facilities, the Commission

requires that there be a Commission-approved Open Access Transmission Tariff (OATT)

on file or that the seller or its applicable affiliate qualifies for waiver of the OATT

requirement.29 The Commission also considers an MBR seller’s ability to erect other

barriers to entry as part of the vertical market power analysis.30 As such, the Commission

requires a seller to provide a description of its ownership or control of, or affiliation with

an entity that owns or controls, intrastate natural gas transportation, storage or

distribution facilities; and physical coal supply sources and ownership of or control over

who may access transportation of coal supplies.31

23. MBR sellers currently are required to submit an asset appendix in an electronic

spreadsheet format listing all generation assets owned or controlled by the MBR seller

and its affiliates, broken out by balancing authority and geographic region and including,

29Id. P 408. See also Kingfisher Wind, LLC, 151 FERC ¶ 61,276, at PP 26-27

(2015) (providing guidance on how qualified sellers can claim blanket OATT waiver

under Order No. 807 and demonstrate lack of vertical market power).

30 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at PP 440-451.

31 Id. P 447; 18 CFR 35.37(e) (2015). The Commission previously had also

required MBR sellers to describe sites for generation capacity, but eliminated this

requirement in Order No. 816. See Order No. 816, FERC Stats. & Regs. ¶ 31,274.


among other things, the in-service date and certain capacity rating information. The asset

appendix also must reflect all electric transmission and natural gas intrastate pipelines

and/or gas storage facilities owned or controlled by the MBR seller and its affiliates and

the location of such facilities and include the size of the facility. Finally, in Order

No. 816, the Commission instituted a requirement that the asset appendix include certain

information regarding long-term power purchase agreements and, in Order No. 816-A,

the Commission modified certain asset appendix reporting requirements.32

1. Ownership Information

24. In Order No. 697-A, the Commission set forth a requirement that an MBR seller

seeking to obtain or retain MBR authority must identify all of its upstream owners as

well as describe the business activity of its owners and whether they are involved in the

energy industry. Specifically, footnote 258 of Order No. 697-A states:

A seller seeking market-based rate authority must provide information

regarding its affiliates and its corporate structure or upstream ownership.

To the extent that a seller’s owners are themselves owned by others, the

seller seeking to obtain or retain market-based rate authority must identify

those upstream owners. Sellers must trace upstream ownership until all

upstream owners are identified. Sellers must also identify all affiliates.

Finally, an entity seeking market-based rate authority must describe the

business activities of its owners, stating whether they are in any way

involved in the energy industry.33

32 See Order No. 816, FERC Stats. & Regs. ¶ 31,374 at PP 139-145, app. B, Asset

Appendix; Order No. 816-A, FERC Stats. & Regs. ¶ 31,382 at PP 58, 61, 63, app. B,

Asset Appendix.

33 Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at n.258.


25. As noted above, a seller seeking MBR authority must show that it and its affiliates

do not have, or have adequately mitigated, horizontal and vertical market power. Given

that information about owners that do not meet the definition of affiliates under

section 35.36(a)(9) is not necessary to evaluate horizontal or vertical market power,

continuing to require information on unaffiliated owners may create a burden that is

unrelated to the Commission’s determination whether a MBR seller qualifies for MBR

authority. Thus, the instant NOPR proposes to revise the requirements of Order

No. 697-A such that MBR sellers would only be required to provide information on

certain “affiliate owners” (i.e., owners that meet the definition of “affiliate” provided in

18 CFR 35.36(a)(9)).34 That is, consistent with the proposal in the Ownership NOPR, we

propose that MBR sellers need to identify only those affiliate owners that either: (1) are

an “ultimate affiliate owner,” defined as the furthest upstream affiliate owner(s) in the

ownership chain; or (2) have a franchised service area or MBR authority, or directly own

or control generation; transmission; intrastate natural gas transportation, storage or

distribution facilities; physical coal supply sources or ownership of or control over who

may access transportation of coal supplies.35

34 The Ownership NOPR similarly proposed to limit the ownership information

requirements to information regarding affiliate owners. See Ownership NOPR, FERC

Stats. & Regs. ¶ 32,713 at P 9.

35 See id.


26. In addition, consistent with the Commission’s proposal in the Ownership NOPR,

we propose that, where an MBR seller is directly or indirectly owned or controlled by a

foreign government or any political subdivision of a foreign government or any

corporation which is owned in whole or in part by such entity, the MBR seller identify

such foreign government, political subdivision, or corporation as part of its ownership

narrative.36 This information is useful in protecting public utility customers against

inappropriate cross-subsidization and affiliate abuse concerns possible when controlling

interests in a public utility are held by a foreign government, any political subdivision of

a foreign government, or any corporation which is owned in whole or in part by such

entity. Finally, we also propose, as the Commission did in the Ownership NOPR, that

with respect to any owners that an MBR seller represents to be passive, the MBR seller

affirm in its ownership narrative that its passive owner(s) own a separate class of

securities, have limited consent rights, do not exercise day-to-day control over the

company, and cannot remove the manager without cause.37

27. We believe that limiting the category of owners for which MBR sellers have to

provide information will be less burdensome for the industry and more useful to the

Commission for purposes of determining whether a seller qualifies for MBR authority.

36 See Ownership NOPR, FERC Stats. & Regs. ¶ 32,713 at P 11.

37 See Ownership NOPR, FERC Stats. & Regs. ¶ 32,713 at P 13 (citing AES

Creative Resources, L.P., 129 FERC ¶ 61,239 (2009) (distinguishing between controlling

interests and passive investment interests)).


We propose changes to the regulatory text in section 35.37(a)(2) to implement the

changes to the level of ownership information required and to require that certain

ownership information be provided in a format specified on the Commission’s website,

so that it can be included in the relational database.

28. We propose that the first time an entity is identified as an affiliate owner by an

MBR seller in an XML submission, the relational database will create a unique identifier

for that entity. A list of all of these entities and their associated unique identifiers, along

with limited identifying information (e.g., business address) would be published on the

Commission’s website. Once a unique identifier is assigned to an entity, all MBR sellers

would be responsible for using this unique identifier when identifying their affiliate

owners in future XML submissions.38 To the extent an MBR seller submits its

relationship with an affiliate owner as privileged under section 388.112 of the

Commission’s regulations, the MBR seller-affiliate owner relationship would remain

confidential if it qualifies for such treatment. However, the identity of the affiliate owner

and its unique identifier or LEI (without an indication of its affiliations) would be

included in the public list on the Commission’s website. We seek comment on this

proposal.

38 If the affiliate owner has an LEI, the MBR seller should use the LEI as the

unique identifier, which would take the place of a Commission-generated identifier on

the published list.


29. Once the MBR seller submits all the required affiliate owner information to the

relational database through the XML filing, the database would be able to generate a

corporate organizational chart. Thus, we also propose to amend section 35.37(a)(2) to

remove the requirement for MBR sellers to submit corporate organizational charts

adopted in Order No. 816.

30. While there will be some increased burden in the short-term associated with

providing ownership information in the relational database, the reduction of ownership

information required to be reported and the elimination of the corporate organizational

chart requirement represent a net decrease in burden for MBR sellers. We seek comment

on these proposals.

2. Asset Appendix Information

31. Currently, MBR sellers submit in an electronic spreadsheet format an asset

appendix that contains information about long-term firm purchases and assets that they

and all of their affiliates own or control. We propose to amend this requirement such

that, for purposes of the asset appendix requirement: (i) information be submitted in

XML format as specified on the Commission’s website so that it can be included in the

relational database; and (ii) each MBR seller would no longer report assets owned by its

affiliates with MBR authority.39 Once an MBR seller identifies its ultimate affiliate

39 This proposal is specific to the relational database requirement to provide asset

appendix information. This does not relieve MBR sellers from the requirements to

consider and discuss affiliate assets as part of their horizontal and vertical market power

analyses.


owner(s), the relational database would be able to identify all the affiliates (i.e., those

with a common upstream owner) with MBR authority (that have each filed an asset

appendix with its own assets) and create an asset appendix for the MBR seller that

includes all of the assets of its affiliates with MBR authority. That asset appendix would

be placed into eLibrary as part of the MBR seller’s filing. For example, Company F’s

filing identifies two ultimate affiliate owners, Company A and Company B. The

relational database would recognize that two other MBR sellers, Company C and

Company D, also identify Company A as an ultimate affiliate owner (making those

two companies also affiliates of Company F) and that Company E has identified

Company B as an ultimate affiliate owner (making Company E another affiliate of

Company F). The relational database would then be able to construct a complete asset

appendix for Company F, which would reflect any and all assets reported by Companies

A, B, C, D, and E, which are all affiliates of Company F. Given the proposed

requirement discussed below that existing MBR sellers make a baseline informational

submission including asset appendix information, we expect that whenever an MBR

seller would need to submit a filing on which the Commission has to act (e.g., an initial

application, triennial submission, or change in status filing), all of the information

necessary for the relational database to create a complete asset appendix (i.e., information

on affiliates’ assets) would exist in the relational database.

32. We believe that this proposed approach would reduce the burden on MBR sellers

given that they would no longer have to submit detailed information on all of their

affiliates’ assets. However, we recognize that an MBR seller’s current asset appendix


could include assets that are owned or controlled by an entity that does not have MBR

authority, such as a generating plant owned by an affiliate that only makes sales under

cost-based rates. If that MBR seller does not have a requirement to submit the

information related to the affiliated generating plant into the relational database, that

information could be “lost.” Accordingly, for purposes of completeness, we propose to

require that the MBR seller include in its relational database filing any assets that are

owned or controlled by an affiliate that does not have MBR authority. In that way, these

assets would be included in the asset appendix that the relational database generates for

the MBR seller.

33. A potential issue with this proposed approach is that the filing MBR seller would

not be directly responsible for all the information that is included in its asset appendix;

some of the information that will be used to generate the complete asset appendix will

have been reported by its affiliates. We propose that a filing MBR seller incorporate by

reference its affiliates’ most recent relational database submittals or otherwise

acknowledge that the information from its affiliates’ relational database submittals will

be included as part of the MBR seller’s asset appendix. We anticipate that MBR sellers

(and the public) will be able to access reports from the relational database’s up-to-date

asset information through a Commission-established interface. Thus, the filing MBR

seller would have prior notice of the asset appendix the relational database would

generate and would be able to note any perceived errors when making its filing. In

addition, once the relational database generates and reports the MBR seller’s full asset

appendix to eLibrary (including information on the affiliates’ assets), the MBR seller


could file to amend the asset appendix posted to eLibrary if the MBR seller believes that

the asset appendix generated by the relational database contains errors.40

34. As noted above, we believe that the approach proposed above in which an MBR

seller reports only its own assets (and those of any affiliate without MBR authority)

would represent an overall decrease in burden on MBR sellers. However, the

Commission is also considering an alternative approach whereby MBR sellers continue

to provide information on all of their affiliates’ assets when submitting asset appendix

information for the relational database. An advantage to this approach would be that the

filer would be submitting all of the information itself and not having to rely on

information submitted by its affiliates. One disadvantage to this approach is that, to the

extent more than one MBR seller submits information about an asset, the more recently

submitted data would overwrite the earlier-submitted data in the relational database such

that the database would reflect only the most recently filed information. Thus, if

Company A submits a triennial filing and reports that it sold a 150 MW generating plant

(Plant 1), it would delete that plant from its asset appendix. The following day, if

Company B, an affiliate of Company A, submits a triennial filing and is unaware of the

sale of Plant 1 by Company A, and it includes Plant 1 in the asset appendix, because the

more recently added information by Company B would “overwrite” the deletion made by

40 To the extent that an MBR seller believes that its affiliate has submitted

incorrect data, we expect them to work together to have the correct information submitted

into the relational database. We note that each MBR seller is responsible for submitting

accurate, factual, and complete information to the Commission.


Company A, it would appear in the relational database that Company A still owns

Plant 1. While this “overwrite” would not impact the content of MBR sellers’ filings, it

would be problematic for the accuracy of the database given that more recently added

information may not always represent the most current or accurate information. For this

reason, we propose the option detailed above whereby each MBR seller does not report to

the relational database the assets owned by its affiliates with MBR authority. As noted

above, the owner of the facility generally should be the best source for information

regarding its own facility. We seek comment on the proposed approach as well as the

alternative approach.

35. In addition to these proposed changes in the submission of asset appendix

information, we propose four additional discrete changes to the information required to

be reported regarding assets. First, MBR sellers currently are free to report their

generation in the asset appendix on a facility-wide basis, i.e., they are not required to

report on a unit-specific basis. We propose instead to require that each generation unit be

reported separately for purposes of the relational database and that MBR sellers report the

Plant Name, Plant Code, Generator ID and Unit Code (if applicable) information from

the Energy Information Agency (EIA) Form EIA-860 database.41 The use of this Form

EIA-860 information will ensure that each unit is uniquely identified, which will enable

the relational database to identify when information is being provided about a generating

41 The Form EIA-860 data is available on the Internet at

https://www.eia.gov/electricity/data/eia860/.


unit that is already part of the relational database and reduce duplication of data. While

there may be an initial small increase in burden associated with transitioning to reporting

generation-related information on a unit-specific basis, we believe that better tracking of

which MBR seller owns or controls each specific unit will improve the Commission’s

ability to assess sellers’ market power, particularly in cases where various units at a

single facility may be owned or controlled by more than one seller. This also aligns the

Commission’s required unit identifying information with the EIA identifying

information, essentially adopting the EIA nomenclature, which should simplify

regulatory requirements for the industry.

36. Second, we propose that MBR sellers be required to report in the relational

database the “Telemetered Location: Market/Balancing Authority Area” and

“Telemetered Location: Geographic Region” in which the unit should be considered for

market power purposes when that location differs from the reported physical location.42

Currently, the asset appendix has columns entitled “Location: Market/Balancing

Authority Area” and “Location: Geographic Region” where MBR sellers are expected to

provide the physical location of their generation units. These columns help the

Commission match the information in the asset appendix to the MBR seller’s market

power analysis. However, some generation units are considered to be in a different

42 MBR sellers currently are required to report the market/balancing authority area

and region where generation is located. We propose that such information continue to be

reported for purposes of the relational database.


market/balancing authority area and geographic region for market power purposes than

the market/balancing authority area and geographic region in which they are physically

located (e.g., generation units that are pseudo-tied into a different balancing authority

area). Requiring MBR sellers to report in the relational database the “Telemetered

Location: Market/Balancing Authority Area” and “Telemetered Location: Geographic

Region” will ensure that the Commission is able to properly match identified generation

units with the markets/balancing authority areas and geographic regions in which they are

studied in an MBR seller’s market power analysis.

37. Third, we propose to require MBR sellers to include information on long-term

firm sales (i.e., those one year or longer) in their relational database submissions. This

would correspond with the requirement added in Order No. 816 that MBR sellers provide

information in the asset appendix regarding long-term firm purchases. This requirement

to report sales in addition to purchases will help ensure that purchasers and sellers report

and treat transactions in a consistent and accurate manner. To the extent that an MBR

seller believes there are any unique qualities of the contract that would not otherwise be

captured by the relational database, the seller is free to explain this as part of its

horizontal market power discussion.

38. Finally, similar to the requirement for reporting generating units, we propose that,

for unit-specific power purchase agreements, MBR sellers provide the associated Plant

Code and Generator ID from the Form EIA-860 database, which will provide the unique

identifier for that unit.


39. We also propose to eliminate some of the asset information requirements currently

reported in the asset appendix. For example, we propose that, for purposes of the

relational database, MBR sellers no longer be required to report the size (kV and length)

of transmission facilities and no longer be required to identify specific transmission

facilities. Instead, we propose that MBR sellers only report in the relational database

whether they have transmission facilities covered by an OATT in a particular balancing

authority area and region. With respect to the natural gas pipeline information currently

required to be reported in the list of transmission assets and natural gas intrastate

pipelines and gas storage facilities (transmission list) portion of the asset appendix, we

propose to revise the requirements so that the MBR seller will only be required to

indicate for purposes of the relational database whether they own natural gas pipelines

and storage facilities, and if so, to identify in which balancing authority area and region

those assets are located. We expect that these proposed changes would reduce the burden

on MBR sellers associated with the transmission list of the current asset appendix. 43 We

seek comments on these proposals.

43 We note that although these proposals would reduce the level of detail currently

required to be provided in the asset appendix about electric transmission and natural gas

assets, they do not affect the descriptive information and representations that MBR sellers

are required to provide for purposes of the vertical market power analysis under 18 CFR

35.37(d), (e).


3. Indicative Screen and Other MBR Information

40. As noted above, current Commission regulations at section 35.37(c)(4) require that

MBR sellers submit their indicative screens in an electronic spreadsheet format. We

propose to amend that regulation to require that the indicative screen information instead

be submitted in XML format as specified on the Commission’s website, which will

enable the information to be included in the relational database. We anticipate that once

an MBR seller submits the required screen information to the relational database through

the XML filing, the database will format the indicative screens for inclusion in the record

in eLibrary. In this way, the generated indicative screens will be available for public

comment, as part of the MBR seller’s filing, and also be available to the Commission and

staff in the relational database for ease of access and analysis. MBR sellers would still be

required to submit to the Commission all work papers underlying their indicative screens.

Such work papers would be included as an attachment to the relevant filing. We seek

comments on these proposals.

41. The proposed information to be collected from MBR sellers via the new XML

format is detailed in the attached draft data dictionary. As discussed above, most of this

information is already part of a market-based rate filing, but some of it is new

information. The types of existing MBR information that we propose to require an MBR

seller to submit in XML for inclusion in the relational database include: (i) MBR seller

category status for each region in which the MBR seller has MBR authority; (ii) markets

in which the MBR seller is authorized to sell ancillary services; (iii) Commission-ordered

seller-specific mitigation, if any; and (iv) whether the MBR seller’s MBR authority is


limited to certain balancing authority areas. In addition, we propose to require MBR

sellers to submit two new categories of information in XML for inclusion in the relational

database: (i) the effective date of the initial grant of market-based rate authority to the

MBR seller and (ii) Connected Entity Information, as explained elsewhere in this NOPR.

42. As discussed above, we propose to amend the Commission’s regulations at

section 35.37 to include this additional information being reported for MBR purposes and

to add a new section 35.51 to include a requirement for MBR sellers to provide

Connected Entity Information in the relational database. We seek comment on these

proposed changes.

C. Need and Authority: Analytics and Surveillance

43. In the Connected Entity NOPR, the Commission discussed the importance to its

analytics and surveillance of understanding the financial and legal connections among

market participants and other entities. The Commission pointed out that screening

market activity for anomalies must include understanding the circumstances surrounding

a given pattern of trading, including the possible motivations for that behavior, which can

sometimes be found in the legal or contractual relationships entities bear to one another.

However, as the Commission also found, the few existing sources of such relationship

information are inadequate because of scope, format, or timing reasons.44 The

44 Connected Entity NOPR, FERC Stats. & Regs. ¶ 32,711 at PP 12-14.


Commission therefore believed that it was necessary to obtain such data from the market

participants themselves.

44. In the instant NOPR, we propose to require the direct submission of Connected

Entity Information not only from MBR sellers but also from entities that trade solely in

virtuals and FTRs. The Commission has the authority under FPA section 205 to regulate

the practices in which these entities engage insofar as those practices affect jurisdictional

rates. Consequently, as discussed more fully below, we propose to now require that such

entities submit Connected Entity Information and their LEIs within 30 days of

commencing trading of virtual products or holding FTRs in Commission-jurisdictional

organized markets and then provide ongoing updates to their Connected Entity

Information to the Commission through the relational database.

45. The authority for obtaining Connected Entity data is found, as described in the

Connected Entity NOPR, in the Commission’s anti-manipulation authority under section

222 of the FPA, its investigative authority under section 307(a) of the FPA, its

administrative powers under section 309 of the FPA, and its inspection and examination

authority under section 301(b) of the FPA, as well as in sections 205 and 206 of the

FPA.45 Section 205 of the FPA provides that “[a]ll rates and charges made, demanded,

or received by any public utility for or in connection with the transmission or sale of

45 16 U.S.C. 824d , 824e, 824v, 825(b), 825f(a), 825h.


electric energy subject to the jurisdiction of the Commission, and all rules and regulations

affecting or pertaining to such rates or charges, shall be just and reasonable . . . .”46

46. The U.S. Supreme Court recently concluded that sections 205(a) and 206(a) grant

the Commission the authority and the duty to ensure that the practices directly affecting

the rates charged by public utilities for the sale of electric energy for resale, and the

transmission of electric energy in interstate commerce, are just and reasonable.47 In the

organized markets, the locational marginal price (LMP) for sales of energy, capacity, and

ancillary services are established through markets administered by the RTOs and ISOs,

which are public utilities. Virtual trades directly affect those LMPs, since they are

submitted in the same way and at the same time as all other bids and offers in the day-

ahead market, and are cleared along with other bids and offers, thus affecting the

outcome of the day-ahead market.48 In addition, market participants that hold FTRs may

be incentivized to use physical or virtual transactions to directly affect LMPs in such a

way as to benefit their FTR holdings.49 All these prices must be just and reasonable

under the Commission’s mandate.

46 16 U.S.C. 824d.

47 FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016).

48 See Cal. Indep. Sys. Operator Corp., 110 FERC ¶ 61,041, at P 30 n. 21 (2005).

49 See ETRACOM LLC, 155 FERC ¶ 61,284 (2016) (in which the Commission

found that ETRACOM engaged in a scheme to submit virtual supply transactions in order

to affect power prices and economically benefit its Congestion Revenue Rights); see also

Black Oak Energy, LLC v. FERC, 725 F.3d 230, 240 (D.C. Cir. 2013) (Black Oak)

(continued ...)


47. The Commission has confirmed its jurisdiction to regulate FTRs under FPA

sections 205 and 206 as charges or contracts “in connection with” jurisdictional

transmission service and “affecting” such service,50 and, in Order No. 697, made note of

its monitoring authority over the RTO/ISO market rules addressing virtual and FTR

transactions and over the market participants engaged in those transactions.51 Moreover,

the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has upheld

the Commission’s authority to regulate virtual traders as participants in Commission-

regulated wholesale energy markets.52 The Commission has held that virtual trades that

affect the price of jurisdictional electricity fall within its jurisdiction.53

48. Accordingly, the Commission’s authority to require the submission of Connected

Entity Information is unrelated to whether a given participant in the energy markets is a

public utility or not, or whether it is seeking MBR authority or not. Consequently, the

Commission has the authority to impose reasonable requirements on entities that solely

(“Since their business interests are purely speculative, FERC explained, the virtual

marketers pose a threat as potential market manipulators.”).

50 See, e.g., Cal. Indep. Sys. Operator Corp., 89 FERC ¶ 61,153 (1999), order on

reh’g, 94 FERC ¶ 61,343 (2001).

51 See Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 921.

52 Black Oak, 725 F.3d 230 at 238-41.

53 See, e.g., Coaltrain Energy, L.P., 155 FERC ¶ 61,204, at PP 247-249 (2016).


trade virtuals and hold FTRs as a condition of participation in those product markets.

These requirements include candor and the disclosure of Connected Entity Information.

49. MBR sellers would also be subject to Connected Entity reporting. The

Commission proposes that FPA section 201(f) entities, which in the main consist of

municipalities and certain cooperatives (as well as their associated joint action agencies),

would not be included in the reporting requirements. These entities are not subject to

FPA sections 205 and 206; furthermore, due to their financial structures, they have

substantially reduced incentives to commit market manipulation.54

D. Nature of the Connected Entity Information Submissions

50. Data proposed for submission by entities for the purpose of analytics and

surveillance would be greatly streamlined from that proposed under the Connected Entity

NOPR.55 This information would be submitted both by MBR sellers (although not

pursuant to the MBR program), and Virtual/FTR Participants. The proposed regulatory

text pertaining to the Connected Entity Information, as well as the proposed regulatory

text pertaining to revised MBR requirements, is set out at the end of this NOPR.

54 See Dairyland Power Cooperative, 37 FPC 12 (1967) (discussing the

characteristics of certain section 201(f) entities that distinguish them from privately-

owned companies).

55 For a short-hand comparison of the Connected Entity NOPR proposals and the

the current NOPR proposal, see Attachment B: Comparison of Connected Entity NOPR

Proposal and Current NOPR Proposal.


51. The Connected Entity Information requirements would be applicable to MBR

sellers and Virtual/FTR Participants. We propose to define the term “Virtual/FTR

Participants” as entities that buy, sell, or bid for virtual instruments or financial

transmission or congestion rights or contracts, or hold such rights or contracts in

organized wholesale electric markets, not including entities defined in section 201(f) of

the FPA. Organized wholesale electric markets would include ISOs and RTOs as those

terms are defined in section 35.46 of the Commission’s regulations. In addition, we

propose to use the same definition for “Seller” as in the MBR context and defined in

section 35.36(a)(1) of the Commission’s regulations. We seek comments on these

proposed definitions. The Commission is also not proposing to require entities that hold

only Auction Revenue Rights to submit Connected Entity Information, but seeks

comment on this aspect of the proposal.56

52. We still propose to use the term “Connected Entity” under the proposed

regulations, but the categories of entities included and their definitions are reduced and

narrowed from that proposed in the Connected Entity NOPR, as described below.

(a) Ownership and control: The proposed regulation would limit upstream,

downstream, and common ownership/control relationship reporting, to

affiliates, as defined in 18 CFR 35.36(a)(9), that are either: (1) ultimate

affiliate owners of the entity, as defined in 18 CFR 35.37(a)(2), (2)

56 Auction Revenue Rights are entitlements to FTR auction revenues that are

allocated based on historical transmission usage or the funding of transmission upgrades.


participants in Commission-jurisdictional organized wholesale electric

markets, or (3) entities that purchase or sell financial natural gas or electric

energy derivative products that settle off of the price of physical electric or

natural gas energy products.

(b) Employees: The proposed regulation would limit reportable employees or

contractors to include only traders, defined as a person who makes, or

participates in, decisions and/or devises strategies for buying or selling

physical or financial Commission-jurisdictional electric products or

physical natural gas.

(c) Debt: The proposed regulation would eliminate the debt instruments and

structured transactions reporting requirement proposed in the Connected

Entity NOPR.

(d) Contracts: The proposed regulation would refine the definition in the

Connected Entity NOPR to require reporting by the filing entity only of

those entities that have entered into an agreement with it that “confers

control over an electric generation asset that is used in, or offered into,

wholesale electric markets.” Agreements that confer control are those that

grant one of the parties the right to make trading decisions for an electric

generation asset of another party or to offer an electric generation asset into

the wholesale electric markets.


We seek comment on this proposed definition of Connected Entity. In particular, we

seek comment on the proposed definition of “trader” as used in the Connected Entity

definition.

53. We recognize that the agreements that would fall into the Contracts category of

this proposed definition of Connected Entity are already reported to the Commission in

EQR. However, for the Commission to be able to efficiently use EQR data in lieu of

including the Contracts category of the Connected Entity definition, we would have to

implement changes to how EQRs are filed that would allow staff to easily pair EQR data

with Connected Entity Information. Therefore, as an alternative to including the

Contracts category of the Connected Entity definition, we are also considering the option

of requiring MBR sellers to include their LEIs in their EQR submissions, which would

facilitate coordination between the two datasets. We request comment on: (1) the

feasibility of this alternative approach; (2) whether this alternative approach is preferable

to inclusion of the Contracts category of Connected Entity Information; and (3) the

burden such a requirement would impose on MBR sellers.

54. We also propose to require MBR sellers and Virtual/FTR Participants to provide

their Purchaser Seller Entity (PSE) NAESB/OATI webRegistry Entity Code(s) (PSE ID),

if available, as part of their Connected Entity Information submission. The PSE ID is the

entity identifier that appears in the contract/market paths field of an e-Tag. The PSE ID

would assist the Commission in pairing the information submitted pursuant to this NOPR


with other datasets, such as e-Tags.57 We are proposing that MBR sellers and

Virtual/FTR Participants who have a PSE ID report that identifier as part of their

Connected Entity Information submissions. However, we are not proposing that those

entities that do not have a PSE ID obtain one. We seek comment on this proposal.

55. As mentioned above, certain information specified in this NOPR is sought for the

purpose of determining whether MBR authority is to be granted or retained, while other

information is sought for the Commission’s analytics and surveillance. For that reason,

the regulations pertaining to these data submissions are set out in different regulatory text

sections, with the MBR-specific requirements set out in subpart H of part 35 and the

regulatory text for the Connected Entity Information set out in a new subpart K of part

35. However, this NOPR proposes coordinating the deadlines for reporting the two types

of data wherever possible, thereby allowing entities that must submit data under both

categories (MBR and Connected Entity) to combine it in a single submission. As noted

above, instructions on the specific formatting and other technical requirements for these

submissions will be set out on the Commission’s website. The Commission will hold

substantial outreach meetings with members of the industry, to determine the most

effective, expeditious, and cost-effective method of structuring these submissions.

57 Availability of E-Tag Information to Commission Staff, Order No. 771, 77 FR

76367 (Dec. 28, 2012), FERC Stats. & Regs. ¶ 31,339 (2012), order on reh’g and

clarification, 142 FERC ¶ 61,181 (2013), order on reh’g and clarification, 153FERC

¶ 61,177 (2015).


E. Legal Entity Identifiers

56. In the Connected Entity NOPR, the Commission discussed its past dissatisfaction

with the available methods for identifying entities that must make filings with the

Commission.58 The Commission found that the information available was often

imprecise and out of date and proposed to require market participants to obtain an LEI,

which is unique to the acquirer. This proposal generally was met with favor in the

comments to the Connected Entity NOPR. In this NOPR, the Commission proposes

requiring that all entities that must make either MBR or Connected Entity Information

filings, obtain and maintain an LEI, and report it to the Commission in its XML

submission for inclusion in the relational database.

F. Confidentiality and Due Diligence

57. As was the case with data to be collected under the Connected Entity NOPR, the

information received under this proposal for analytics and surveillance would be treated

as non-public and confidential. The Commission has long experience with maintaining

the non-public status of information used for investigative purposes, and this applies

equally to its analytics and surveillance program. Information submitted for MBR

purposes will be made public via publication in eLibrary, and potentially through other

means, such as the asset appendix interface discussed above unless confidential treatment

58 Connected Entity NOPR, FERC Stats. & Regs. ¶ 32,711 at P 24.


is requested pursuant to the Commission regulations.59 Connected Entity Information

would be kept non-public unless the Commission authorized its release under the

provisions of Part 1b of its regulations.60

58. The Commission appreciates that when extensive data must be submitted to a

regulatory entity, occasionally some data may, despite an entity’s best efforts to achieve

accuracy, turn out to be incomplete or incorrect. In the case of such inadvertent errors,

the Commission’s practice is simply to require that a corrected submittal be made without

sanctions of any kind. The intentional or reckless submittal of incorrect or misleading

information could, however, result in the imposition of sanctions, including civil

penalties, as has occurred in other contexts.61 An entity can protect itself against such a

result by applying due diligence to the retrieval and submission of the required

information.

59 See 18 CFR 388.112.

60 18 CFR pt. 1b. The protected nature of the collected information would not,

however, prohibit the Commission from sharing it on a confidential basis, with market

monitors, RTOs and ISOs. Such sharing was explicitly authorized in Southwest Power

Pool, Inc., 137 FERC ¶ 61,046, at P 20 (2011).

61 See, e.g., Berkshire Power Company LLC and Power Plant Management

Services LLC, 154 FERC ¶ 61,259, at PP 15-16 (2016); Coaltrain Energy, L.P,

155 FERC ¶ 61,204, at PP 274-287 (2016); City Power Marketing, LLC and K. Stephen

Tsingas, 152 FERC ¶ 61,012, at P 216 (2015); Constellation Energy Commodities Group,

Inc. 145 FERC ¶ 61,062, at P 5 (2013); Gila River Power, LLC, 141 FERC ¶ 61,136,

at P 12 (2012).


G. Filing Requirement for Existing and New Virtual/FTR Participants62

59. We propose to require Virtual/FTR Participants to submit an Initial Connected

Entity Submission, as defined in section 35.50(b), to engage, or continue to engage, in the

virtual and/or FTR markets within the organized wholesale electric markets. The Initial

Connected Entity Submission would: (i) contain the ownership, trader, and contract

information set forth in the regulation regarding Connected Entity Information; and

(ii) report its LEI. The Commission would not issue an order approving the Initial

Connected Entity Submission. We propose that any current Virtual/FTR Participant

submit the Initial Connected Entity Submission within 90 days of the publication of a

Final Rule in the Federal Register. We